Huntington Bancshares Incorporated · NASDAQ:HBAN
Huntington Bancshares — Q1 2020 Earnings Presentation
96 slides from Huntington Bancshares's earnings presentation, Apr 30, 2020
Slide 1: 2020 Second Quarter Investor Presentation
2020 Second Quarter Investor Presentation April 30, 2020 The Huntington National Bank is Member FDIC. ®, Huntington® and Huntington. Welcome.® are federally registered service marks of Huntington Bancshares Incorporated. ©2020 Huntington Bancshares Incorporated.
Slide 2: Disclaimer
Disclaimer CAUTION REGARDING FORWARD‐LOOKING STATEMENTS This communication contains certain forward‐looking statements, including, but not limited to, certain plans, expectations, goals, projections, and statements, which are not historical facts and are subject to numerous assumptions, risks, and u
Slide 3: Important Messages
Important Messages Building long‐term shareholder value Consistent organic growth Maintain aggregate moderate‐to‐low risk appetite Minimize earnings volatility through the cycle Disciplined capital allocation Focus on top quartile financial performance relative to peers Strategic focus on Cu
Slide 4: Table of Contents
Table of Contents Franchise and Leadership 5 Balance Sheet 36 Economic Footprint 6 Earning Assets 37 Leadership Team 7 Non‐Equity Funding 38 Board of Directors 8 Loan Composition 39 Environmental, Social, & Governance 12 Commercial Loans 41 Strategy 14 Consumer Loans 45 Pandemic Update 15 Investment
Slide 5: Franchise and Leadership
Franchise and Leadership (4) Huntington Welcome: JOC mW se We A
Slide 6: Huntington Bancshares Overview
Huntington Bancshares Overview $114 billion asset regional bank holding company Consolidated Ohio Retail Footprint Products Branches: 827 Branches: 394 Deposits: $86.8 billion Deposits: $55.3 billion Consumer Loans(1): $110.5 billion Loans(1): $40.0 billion Business Banking Commercial Wealth Managem
Slide 7: Leadership Team
Leadership Team Chairman, President, and CEO Steve Steinour Business Segments Consumer and Business Banking Regional Banking and The Private Client Group Andy Harmening Sandy Pierce Commercial Banking Vehicle Finance Rick Remiker(1) Sandy Pierce Finance Risk Zach Wasserman – Chief Financial Officer
Slide 8: Deeply Engaged, Diverse Board of Directors
Deeply Engaged, Diverse Board of Directors *Picture includes Kathleen Ransier, who retired from the Board effective April 22, 2020 Lizabeth Ardisana Gina D. France Kenneth J. Phelan Owner and CEO, ASG Renaissance LLC Founder, President and CEO, France Strategic Former Chief Risk Officer of the U.S.
Slide 9: Board Commitment to Strong Corporate Governance and Engagement
Board Commitment to Strong Corporate Governance and Engagement Meetings 2010 2011 2012 2013 2014(1) 2015 2016 2017 2018 2019 HBI Board Meeting 12 9 13 16 12 15 15 16 17 12 HBI Audit Committee(2) 16 15 11 13 11 12 10 11 19 17 HBI Capital Planning Committee(3) 8 8 HBI Community Development Committee 4
Slide 10: Board Skills, Knowledge, and Experience
Board Skills, Knowledge, and Experience Directors embody a well‐rounded variety of skills, knowledge, and experience, as demonstrated in the chart below Experience/Background # of Directors Audit / Financial Reporting 8 Client / Consumer Marketing, Branding & Communication 5 Technology / Cybersecuri
Slide 11: Management / Shareholder Alignment
Management / Shareholder Alignment Driving reduced earnings volatility, more stable returns, higher capital generation, and stronger shareholder value creation Board and CEO Significant “Everyone Disciplined set the investment in Owns Risk” management “Tone at the Top” risk management culture of cre
Slide 12: Delivering on Our Purpose
Delivering on Our Purpose Our Commitment to Environmental, Social, & Governance (ESG) Our commitment to ESG, or Corporate Sustainability, is a reaffirmation of our long‐held commitment to do the right thing for our shareholders, customers, colleagues, and communities. 2018 ESG Report Upcoming 2019 E
Slide 13: 2018 ESG Highlights
2018 ESG Highlights We look out for people Building economically inclusive communities Commitment to diversity and inclusion $986 million in community development loans and investments 43% 50% 5,251 community development loans supporting affordable housing middle and middle and executive executive m
Slide 14: Strategy
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Slide 15: Pandemic Update: Living our Purpose
Pandemic Update: Living our Purpose Amid the current COVID‐19 pandemic, we are living our purpose to make people’s lives better, help businesses thrive, and strengthen the communities we serve. We recognize this is a health crisis, first and foremost, but it has also created enormous economic challe
Slide 16: Purpose Drives Performance
Purpose Drives Performance Huntington’s approach to shareholder value creation The best way to achieve our long‐term financial goals and generate sustainable, through‐the‐cycle returns is to fulfill our purpose to make people’s lives better, help businesses thrive, and strengthen the communities we
Slide 17: Huntington Strategy
Huntington Strategy Vision of top quartile financial performance enabled through differentiated customer experience Vision Source of Differentiation Customer Experience Pillars of Strategic Execution Category of One (Culture & Brand) Deepen Customer Relationships Extend Local Advantage Enabling Inve
Slide 18: Disciplined Expense Management
Disciplined Expense Management Continue to build capacity for digital, mobile, and other investments Consolidation of 30 in‐store Giant Eagle branches in 1Q20 Colleague reduction of approximately 200 FTE in 4Q19 Continued shift towards colleagues supporting our core strategies, with technology
Slide 19: Strategically Positioning For a Digital Future
Strategically Positioning For a Digital Future Continue tech enhancements driving modernized delivery model and recognition Improving and Simplifying Sales and Service Transforming Branch Efficiency Next Gen Acquisition Reduced time to open and Deepening We Listen to Customers & an account by 30%
Slide 20: Delivery Evolution
Delivery Evolution Customer usage continues migration to mobile and digital channels Mobile, Digital, and Self‐Service Customer Usage Digitally Active Customers Mobile Adoption Customers Enrolled in Alerts +23% 2.2 million +52% +390% 1.8 million 1.5 million 3.3 million 1.0 million 0.7 million Mar 20
Slide 21: Financial Update
Financial Update (4) Huntington Welcome: ; JOC ATX
Slide 22: 2020 First Quarter Financial Highlights
2020 First Quarter Financial Highlights Tangible book value per common share increased 8% year‐over‐year Revenue (FTE) EPS TBVPS $1,157 million $0.03 $8.28 1% Y/Y 91% Y/Y 8% Y/Y ROA ROCE ROTCE 0.17% 1.1% 1.8% 118 basis points Y/Y 12.7 percentage pts Y/Y 16.5 percentage pts Y/Y Average loans increa
Slide 23: Pretax, Pre-Provision Earnings (PTPP)
Pretax, Pre‐Provision Earnings (PTPP) Solid growth in PPTP in face of challenging environment illustrates underlying earnings power; PTPP exceeds elevated credit provisioning Year‐Over‐Year Change ($ in millions) 1Q20 1Q19 $ % Net interest income (FTE) $796) $829) ($33)) ‐4%) Noninterest income $361
Slide 24: Positioned for Strong Relative Performance Through-the-Cycle
Positioned for Strong Relative Performance Through‐the‐Cycle Strengthened Pretax Pre‐Provision Net Revenue (1) Well‐Diversified Balance Sheet $ billions $1.9 $2.0 $2.0 $1.8 $1.4 Core Loans (2) 44% 50% 50% Deposits (2) $76 B 56% $80 B 2016 2017 2018 2019 1Q20 (3) 1.78% 2.24% 2.23% 2.28% 2.24% Commerc
Slide 25: Strategic Portfolio Mix
Strategic Portfolio Mix Thoughtful diversification is a vital component of our credit risk management Consumer Bank Commercial and Business Bank Period End Period End As of 3/31/20: As of 3/31/20: Consumer remains strong More measured tone from commercial clients 49% of Record mortgage applica
Slide 26: Near-Term Outlook (As of 4/23/2020)
Near‐Term Outlook (As of 4/23/2020) Withdrawing prior 2020 expectations due to uncertain economic outlook 2Q20 Expectations (vs. 1Q20) • Average commercial loan growth of 4‐5% linked‐quarter reflecting full quarter impact of recent $3.2B CML line draws but excluding $6B SBA PPP lending (both CML lin
Slide 27: Income Statement
Income Statement (4) Huntington Welcome: ; JOC ATX
Slide 28: Net Interest Income
Net Interest Income Year‐over‐year net interest margin compression outpaced increase in average earning assets $ in millions $840.00 Net Interest Income (FTE) 3.80% $830.00 3.70% $829 $820.00 3.60% $819 $810.00 3.50% $805 -4% 3.39% $800.00 3.40% $790.00 3.31% $796 $786 3.30% $780.00 3.20% 3.14% 3.20
Slide 29: Net Interest Margin (FTE)
Net Interest Margin (FTE) NIM down 25 basis points year‐over‐year reflecting lower market interest rates and inherent asset sensitivity of balance sheet Net Interest Margin Trends Components of Cost of Interest‐Bearing Liabilities 4.40% 4.35% 4.21% 4.03% 3.88% 3.98% 3.91% 3.39% 3.59% 3.50% 3.31% 3.2
Slide 30: Hedging Program Overview
Hedging Program Overview Loan by Rate Index(1) Loan by Rate Index(1) Hybrid ARMs Hybrid ARMs 10% 10% Variable Variable (>1‐month) (>1‐month) 6% 6% Fixed Fixed 40% 40% Variable Impact of Hedging (1‐month) Variable Hedged (1‐month) Variable 19% 44% (1‐month) Unhedged 25% Wtd Avg. Wtd. Avg. Pay Wtd Avg
Slide 31: Deposit Repricing Overview
Deposit Repricing Overview CD and MMA Promo Rate Maturities Monthly Interest‐Bearing Deposit Cost 1.00% 1.01% 0.98% 3Q20 0.95% 1Q20 0.91% 0.90% $2.8 B Avg Cost: $4.9 B 0.80% 1.62% Avg Cost: 0.77% 0.74% 2.12% 2Q20 $3.4 B Avg Cost: 0.53% 1.77% Jun19 Jul19 Aug19 Sep19 Oct19 Nov19 Dec19 Jan20 Feb20 Mar2
Slide 32: Noninterest Income
Noninterest Income Mortgage banking and capital markets fuel growth in noninterest income Change in Quarterly Noninterest Income Year‐over‐Year Total Noninterest Income Mtg banking: +$37 176% +13% $372 Capital Markets: +$11 50% $361 Trust & inv mgmt: +$3 7% Cards & payment: +$2 4% $319 Insurance: +$
Slide 33: Mortgage Banking Noninterest Income Summary
Mortgage Banking Noninterest Income Summary $73 Mortgage Banking Income (MBI) Salable Production Mix $58 $58 $63 $54 $4 $53 $11 29% 28% $8 $54 37% $43 $47 51% 55% $34 $46 $33 $36 $21 $23 $24 71% 72% $13 2.86% 3.12% 63% 2.26% 2.55% 2.64% 49% 45% $3 $(7) $(3) $(2) 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q
Slide 34: Noninterest Expense
Noninterest Expense Disciplined expense management while continuing to invest in digital and mobile technology Change in Quarterly Noninterest Expense Year‐over‐Year Total Expense Outside data processing: +$4 5% $701 Marketing: +$2 29% ‐0% Personnel costs: +$1 0% $653 $652 Equipment: +$1 3% Deposit
Slide 35: Tax Rate Summary
Tax Rate Summary Reported vs. FTE adjusted ($ in millions) 1Q20 4Q19 1Q19 Reported (GAAP) Income before income taxes $58 $372 $421 Provision for income taxes $10 $55 $63 Effective tax rate 17.0% 14.8% 15.0% FTE Adjustment Income before income taxes $6 $6 $7 Provision for income taxes $6 $6 $7 Adjust
Slide 36: Balance Sheet
Balance Sheet (4) Huntington Welcome: ; JOC ATX
Slide 37: Average Earning Assets
Average Earning Assets Securities, residential mortgage, and automobile loan growth drive year‐over‐ year earning asset growth Average Quarterly Growth Year‐over‐Year Average Growth Linked Quarter Total Securities: +$1.3 5% Total Securities: +$1.2 5% Residential Mortgage: +$0.6 6% C&I: +$0.5 2% Auto
Slide 38: Average Non-Equity Funding
Average Non‐Equity Funding Money market and interest‐bearing demand drive continued year‐over‐year growth in core deposits Average Quarterly Growth Year‐over‐Year Average Growth Linked Quarter Borrowings & Other: +$2.2 16% Borrowings & Other: +$1.5 11% MMA: +$1.8 8% DDA‐Int. Bearing: +$1.1 5% DDA‐In
Slide 39: Average Loan Composition: $75.7 Billion
Average Loan Composition: $75.7 Billion 1Q20 average balances Average Balance by Type Average Balance by Segment 2% 8% 5% 41% 29% 15% 27% 12% 9% 17% 36% C&I $30.8B Commercial Real Estate $6.7B Consumer and Business Banking: $21.6B Auto $12.9B Commercial Banking: $27.2B Home Equity $9.0B Vehicle Fina
Slide 40: Consumer and Commercial Asset Trends
Consumer and Commercial Asset Trends 1Q20 vs 1Q20 vs Average ($ in billions) 1Q20 4Q19(1) 1Q19 Commercial Commercial and industrial loans $ 30.8 6) % 1) % Commercial real estate: Construction loans 1.2 (5) (1) Commercial loans 5.6 (4) (2) Total commercial loans 37.6 4) 0) Commercial bonds(2) 3.0 (2)
Slide 41: Total Commercial Loans – Granularity
Total Commercial Loans – Granularity End of period outstandings of $39.9 billion # of Loans by Size Loans by Dollar Size 10% 27% 42,190 21% 96% 13% 1,735 4% 29% < $5 MM $5+ MM < $5 MM: $10.8B $5 MM ‐ < $10 MM 714 $5 MM ‐ < $10 MM: $5.1B $10 MM ‐ < $25 MM 718 $10 MM ‐ <$25 MM: $11.6B $25 MM ‐ < $50 M
Slide 42: Commercial and Industrial: $33.0 Billion
Commercial and Industrial: $33.0 Billion Diversified by sector and geographically within our Midwest footprint; asset finance and specialty lending in extended footprint Strategic focus on middle market companies with $20 ‐ $500 million in sales and Business Banking customers with <$20 million i
Slide 43: C&I – Auto Industry
C&I – Auto Industry End of period balances Outstandings ($ in millions) 1Q20 4Q19 3Q19 2Q19 1Q19 Suppliers(1) Domestic $ 883 $ 759 $ 809 $ 807 $ 861 Foreign 0 0 0 0 0 Total suppliers 883 759 809 807 861 Dealers Floorplan‐domestic 2,309 2,370 1,983 2,060 2,132 Floorplan‐foreign 1,207 986 763 828 798
Slide 44: Commercial Real Estate: $7.0 Billion
Commercial Real Estate: $7.0 Billion Long‐term, meaningful relationships with opportunities for additional cross‐sell o Primarily Midwest footprint projects generating adequate return on capital o Proven CRE participants… 28+ years average CRE experience o >80% of the loans have personal guarantee
Slide 45: Huntington Auto Finance
Huntington Auto Finance Significant presence in our markets and in our industry 11 strategically located regional offices servicing our dealer partners in 23 states: Ohio New Hampshire Indiana Tennessee Michigan Minnesota West Virginia New Jersey Pennsylvania Connecticut Kentucky Iowa Illinois North
Slide 46: Automobile: $12.9 Billion
Automobile: $12.9 Billion Extensive relationships with high quality dealers o Huntington consistently in the market for nearly 70 years o Dominant market position in the Midwest with ~4,300 dealers o Floorplan and dealership real estate lending, core deposit relationship, full Treasury Management,
Slide 47: Auto Loans – Production and Credit Quality
Auto Loans – Production and Credit Quality 1Q20 4Q19 3Q19 2Q19 1Q19 4Q18 3Q18 2Q18 Originations Amount ($ in billions) $1.6 $1.9 $1.6 $1.3 $1.2 $1.4 $1.4 $1.6 % new vehicles 47% 52% 46% 40% 42% 49% 45% 47% Avg. LTV 89% 88% 90% 92% 90% 90% 91% 89% Avg. FICO 778 781 773 766 764 767 763 766 Portfolio P
Slide 48: Auto Loans – Origination Trends
Auto Loans – Origination Trends Loan originations from 2013 through 1Q20 demonstrate strong characteristics and continued improvements from pre‐2010 Credit scoring model most recently updated in January 2017 2016‐2019 net charge‐offs impacted by acquisition of FirstMerit, including purchase acco
Slide 49: Home Equity: $9.0 Billion
Home Equity: $9.0 Billion Focused on geographies within our Midwest footprint with relationship customers Focused on high quality borrowers… portfolio as of 1Q20: o Average weighted FICO scores of 750+ o Average weighted LTVs of <85% for junior liens and <75% for 1st‐liens o Approximately 55% ar
Slide 50: Home Equity – Origination Trends
Home Equity – Origination Trends Consistent origination strategy since 2010 HPI Index is at highest level since pre‐2007 – consistent with general assessment of the overall market Focused on high quality borrowers… 1Q20 originations: o Average weighted FICO scores of 750+ o Average weighted LT
Slide 51: Residential Mortgages: $11.4 Billion
Residential Mortgages: $11.4 Billion Traditional product mix focused on geographies within our Midwest footprint Early identification of at‐risk borrowers. “Home Savers” program has a 75% success rate Credit Quality Review 1Q20 4Q19 3Q19 2Q19 1Q19 Period end balance ($ in billions) $11.4 $11.4 $
Slide 52: Residential Mortgages – Origination Trends
Residential Mortgages – Origination Trends Consistent origination strategy since 2010 HPI Index is at highest level since pre‐2007 – consistent with general assessment of the overall market Average 1Q20 portfolio origination: purchased / refinance mix of 41% / 59% ($ in billions) 1Q20 2019 201
Slide 53: Recreational Vehicle & Marine
Recreational Vehicle & Marine Expansion of legacy FirstMerit product leveraging additional industry and regional credit and relationship manager expertise Experienced team with 20+ years average industry experience Centrally underwritten with focus on high quality borrowers Indirect originat
Slide 54: RV and Marine: $3.6 Billion
RV and Marine: $3.6 Billion Indirect origination via established dealers with 2017‐2018 expansion into new states, primarily in the Southeast and the West Centrally underwritten with focus on super prime borrowers Underwriting aligns with Huntington’s origination standards and risk appetite o
Slide 55: RV and Marine – Origination Trends
RV and Marine – Origination Trends Tightened underwriting standards post‐FirstMerit acquisition along with geographic expansion, primarily into the Southeast and the West Net charge‐offs impacted by acquisition of FirstMerit, including purchase accounting treatment of acquired portfolio A ($ in
Slide 56: Securities Mix and Yield
Securities Mix and Yield(1) Securities Portfolio Mix Securities Portfolio Yield $30 ($ in billions) 3.10% 3.04% Held‐to‐maturity Available‐for‐sale 3.01% 3.00% 2.94% $25 2.90% 2.87% 2.84% 2.81% 2.79% $20 2.80% 2.75% 14.4 14.8 2.70% 14.4 14.0 13.8 14.0 13.9 13.5 13.5 $15 2.67% 2.60% 2.54% 2.52% 2.51%
Slide 57: AFS and HTM Securities Overview
AFS and HTM Securities Overview(1) March 31, 2020 December 31, 2019 March 31, 2019 ($ in millions) % of Remaining % of Remaining % of Remaining AFS Portfolio Carry Value Portfolio Life to Maturity Yield(1) Carry Value Portfolio Life to Maturity Yield(1) Carry Value Portfolio Life to Maturity Yield(1
Slide 58: Average Deposit Composition: $82.7 Billion
Average Deposit Composition: $82.7 Billion 1Q20 average balances Average Balance by Type Average Balance by Segment 0% 3% 4% 5% 0% 7% 24% 12% 26% 62% 30% 26% Demand ‐ Noninterest Bearing $20.1B Consumer and Business Banking: $51.3B Demand ‐ Interest Bearing $21.2B Commercial Banking: $21.5B Money Ma
Slide 59: Total Core Deposit Trends
Total Core Deposit Trends 1Q20 vs 1Q20 vs Average ($ in billions) 1Q20 4Q19(1) 1Q19 Commercial Demand deposits – noninterest bearing $ 14.9 (21) % (1) % Demand deposits – interest bearing 12.5 28) 11) Total commercial DDA 27.4 (0) 4) Other core deposits(2) 7.9 (4) (6) Total commercial core deposits
Slide 60: Stable, Diversified Sources of Wholesale Funds
Stable, Diversified Sources of Wholesale Funds Historical issuance and current ratings Unsecured Debt Issuances and Maturities ($ in billions) 3.1 2.5 2.0 2.0 1.7 1.6 1.5 1.1 1.3 0.8 0.6 ‐ 2015 2016 2017 2018 2019 2020 YTD Matured Issued Debt Credit Ratings Recent Highlights Senior HoldCo Issued $
Slide 61: Stable, Diversified Sources of Wholesale Funds
Stable, Diversified Sources of Wholesale Funds Smooth runoff profile and optimization of funding costs 1.4 Quarterly Maturities Through 2025 Hold Co Sub Bank 1.2 1.0 0.8 $ in billions 0.6 0.4 0.2 0.0 2Q20 4Q20 2Q21 4Q21 2Q22 4Q22 2Q23 4Q23 2Q24 4Q24 2Q25 Objectives Annual Maturities ($ in millions)
Slide 62: Capital
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Slide 63: Strong Capital Management
Strong Capital Management 1Q20 CET1 and total risk‐based capital ratios above peer median 1Q20 Total Risk‐Based Capital Ratio Dividend Yield (as of 4/30/20) 13.6% Peer Median: 5.8% 13.3% Peer Median: 12.6% 7.8% 7.4% 12.9% 7.0% 12.7% 6.5% 6.4% 12.6% 12.6% 12.5% 12.5% 12.3% 5.8% 5.8% 4.8% 4.3% 4.3% 11
Slide 64: Capital and Liquidity
Capital and Liquidity Managing capital and liquidity conservatively within uncertain economic outlook and consistent with our aggregate moderate‐to‐low risk appetite EOP Loan to Deposit Ratio $1.54 Modified Liquidity Coverage Ratio $0.95 150% $1.52 149% $0.93 148% $1.50 93% $0.91 147% 92% $1.48 91%
Slide 65: Change in Common Shares Outstanding
Change in Common Shares Outstanding Repurchased $88 million of common shares in 1Q20 o Represents 7.1 million common shares at an average cost of $12.38 per share Share count in millions 1Q20 4Q19 3Q19 2Q19 1Q19 4Q18 3Q18 Beginning shares outstanding 1,020 1,033 1,038 1,046 1,047 1,062 1,104 Emplo
Slide 66: Credit Quality
Credit Quality (4) Huntington Welcome: ; JOC ATX
Slide 67: Strategic Credit Risk Management Actions Since 2009
Strategic Credit Risk Management Actions Since 2009 Positioned for top quartile through‐the‐cycle performance • Established clear credit risk appetite and aligned credit strategy and policy • Centralized credit and risk management (versus delegation to each region) 2009 • Established credit concentr
Slide 68: Strong Credit Risk Management
Strong Credit Risk Management 1Q20 ACL coverage above peer median 1Q20 ACL as % of Total Loans and Leases 1Q20 ACL as % of 2018 DFAST Severely 3.19% Adverse Cumulative Losses(1) Peer Median: 1.76% 44% Peer Median: 34% 42% 38% 35% 2.13% 2.05% 33% 1.89% 1.83% 31% 1.76% 1.73% 28% 1.66% 1.56% 1.47% 1.47
Slide 69: Current Expected Credit Losses (CECL) Adoption
Current Expected Credit Losses (CECL) Adoption CECL reserve impact on provision for credit losses Elected to forego CECL delay and implemented on January 1, 2020 Economic outlook was deteriorating rapidly toward the end of the quarter, resulting in an incremental increase to the quarterly credit
Slide 70: Credit Quality – NPAs and TDRs
Credit Quality – NPAs and TDRs Proactive and conservative approach to identifying impaired loans Nonaccrual Loans and Leases Q/Q Trend in Nonperforming Assets 1Q20 4Q19 0.75% (NALs): Change 0.61% 0.61% 0.64% 0.66% $46 $47 $44 $56 Commercial and Industrial $396 $323 $73) $195 $415 $413 $438 $442 $391
Slide 71: Balance Sheet Concentrations
Balance Sheet Concentrations Modest exposure to COVID‐19 high impact industries Selected Commercial Loan Categories $8.3 billion outstanding (10.6% of total loans) • Accommodations: $0.5 billion, 95% hotel exposure Accommodations $2.1 billion • Restaurants: $1.5 billion, 67% centrally managed with a
Slide 72: Leveraged Lending Portfolio
Leveraged Lending Portfolio $2.97B in outstanding balances(1) Outstandings by Industry HNB Leveraged Lending Definition • Aggregate exposure greater than $5MM • Senior leverage 2.5x, total leverage 4.0x 23% • Greater than $500MM revenue: Senior leverage 3.0x • Includes collateral test 42% • Includes
Slide 73: Asset Quality and Reserve Trends
Asset Quality and Reserve Trends CECL implementation and deteriorating economic outlook drive material increase in allowance for credit losses Net Charge‐off Ratio ACL and ALLL Ratios ACL Ratio 2.05% 0.62% ALLL Ratio 1.93% 0.39% 0.39% 1.15% 1.17% 1.18% 1.18% 0.38% 0.25% 1.02% 1.03% 1.05% 1.04% 1Q19
Slide 74: Credit Quality Trends Overview
Credit Quality Trends Overview 1Q20 4Q19 3Q19 2Q19 1Q19 Net charge‐off ratio 0.62% 0.39% 0.39% 0.25% 0.38% 90+ days PD and accruing 0.21 0.23 0.22 0.20 0.20 NAL ratio(1) 0.72 0.62 0.58 0.57 0.56 NPA ratio(2) 0.75 0.66 0.64 0.61 0.61 Criticized asset ratio(3) 3.59 3.64 3.62 3.43 3.38 ALLL ratio 1.93
Slide 75: Consumer Loan Delinquencies
Consumer Loan Delinquencies(1) 30+ Days 90+ Days 1.13% 1.15% 1.11% 1.06% 1.07% 2.49% 2.50% 2.41% 2.40% 2.10% 1.32% 1.34% 1.36% 1.22% 1.22% 0.41% 0.42% 0.41% 0.39% 0.39% 0.95% 0.88% 0.79% 0.84% 0.84% 0.81% 0.81% 0.87% 0.80% 0.16% 0.16% 0.16% 0.14% 0.13% 0.67% 0.06% 0.06% 0.07% 0.05% 0.06% 1Q19 2Q19 3
Slide 76: Total Commercial Loan Delinquencies
Total Commercial Loan Delinquencies 30+ Days(1) 90+ Days(2) 0.30% 0.28% 0.17% 0.21% 0.13% 0.03% 0.03% 0.02% 0.01% 0.01% 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 See notes on slide 95 2020 Second Quarter Investor Presentation 76
Slide 77: Net Charge-Offs
Net Charge‐Offs Total Commercial Loans Total Consumer Loans ($ in millions) ($ in millions) NCOs NCOs Annualized % Annualized % 0.89% 0.41% 0.39% 0.38% 0.35% 0.31% 0.40% 0.38% 0.35% $83 0.20% $38 $37 $35 $34 $30 $38 $36 $33 $18 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 2020 Second Quarter In
Slide 78: Nonperforming Asset Flow Analysis
Nonperforming Asset Flow Analysis End of Period ($ in millions) 1Q20 4Q19 3Q19 2Q19 1Q19 NPA beginning‐of‐period $498 $482 $460 $461 $387 Additions / increases 274 175 165 117 218 Return to accruing status (18) (20) (24) (16) (33) Loan and lease losses (91) (48) (66) (34) (46) Payments (70) (63) (38
Slide 79: Criticized Commercial Loan Analysis
Criticized Commercial Loan Analysis End of Period ($ in millions) 1Q20 4Q19 3Q19 2Q19 1Q19 Criticized beginning‐of‐period $2,394 $2,365 $2,256 $2,216 $2,054 Additions / increases 510 479 523 524 462 Advances 187 109 106 129 93 Upgrades to “Pass” (100) (174) (153) (236) (97) Paydowns (435) (359) (303
Slide 80: Peer Comparisons
Peer Comparisons (4) Huntington Welcome: ; JOC mW se We A
Slide 81: Huntington's Peer Group
Huntington’s Peer Group Price / Total Total Total Market Dividend $ in millions Assets Deposits Loans Capitalization Consensus Consensus Tangible Yield 2020E 2021E Book Truist Financial Corporation $506,229 $350,179 $319,229 $50,287 11.6x 10.4x 1.5x 4.8% PNC Financial Services Group, Inc. 445,493 30
Slide 82: Peer Comparisons – Profitability
Peer Comparisons – Profitability Profitability metrics compare favorably with peers 1.60% ROA • 1Q20 results negatively impacted across peer group by increased provision expense due to deteriorating economic outlook 1.20% • Return on Equity (ROE) and Return on Tangible 0.80% Common Equity (ROTCE) co
Slide 83: Peer Comparisons – Operating Leverage & Efficiency
Peer Comparisons – Operating Leverage & Efficiency Efficiency ratio consistently better than peer median Y/Y Revenue Growth 8% Y/Y Expense Growth 8% 6% 6% 4% 4% 2% 2% 0% 0% ‐2% ‐2% 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 HBAN Peer Median HBAN Peer Me
Slide 84: Peer Comparisons – Capital
Peer Comparisons – Capital Managing CET1 to high end of 9% – 10% operating range Common Equity Tier 1 (CET1) Ratio 12.0% • Regulatory capital ratios impacted by implementation of CECL on 1/1/20 11.0% • CET1 of 9.5% at quarter end compared to stated 10.0% operating range of 9% ‐ 10% 9.0% • CET1 is no
Slide 85: Peer Comparisons – Credit Quality
Peer Comparisons – Credit Quality Overall credit quality metrics remain stable NPAs (ex‐TDRs) / Loans + OREO Loan Loss Reserve (ALLL) / Total Loans 1.00% 2.00% 0.80% 1.50% 0.60% 1.00% 0.40% 0.50% 0.20% 0.00% 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 HB
Slide 86: Appendix
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Slide 87: Basis of Presentation
Do we Basis of Presentation consolidate this and next slide? Use of Non‐GAAP Financial Measures This document contains GAAP financial measures and non‐GAAP financial measures where management believes it to be helpful in understanding Huntington’s results of operations or financial position. Where n
Slide 88: Basis of Presentation
Basis of Presentation Rounding Please note that columns of data in this document may not add due to rounding. Significant Items From time to time, revenue, expenses, or taxes are impacted by items judged by management to be outside of ordinary banking activities and/or by items that, while they may
Slide 89: Reconciliation
Reconciliation Pretax Pre‐Provision Net Revenue (PPNR) ($ in millions) 1Q20 2019 2018 2017 2016 Net interest income – FTE $796 $3,239 $3,219 $3,052 $2,412 Noninterest income 361 1,454 1,321 1,307 1,151 Total revenue 1,157 4,693 4,540 4,359 3,563 Less: Significant Items 0 0 0 2 1 Less: gain / (loss)
Slide 90: Reconciliation
Reconciliation Tangible common equity and ROTCE ($ in millions) 1Q20 4Q19 1Q19 Average common shareholders’ equity $10,433 $10,681 $9,953 Less: intangible assets and goodwill 2,217 2,228 2,265 Add: net tax effect of intangible assets 48 50 58 Average tangible common shareholders’ equity (A) $8,264 $
Slide 91: Historical Yield Curves
Historical Yield Curves Yield curve moved lower and inverted LIBOR / Swap Curves 2.25% 2.00% 12/31/19 1.75% 1.50% 1.25% 1.00% 3/6/20 0.75% 3/31/20 0.50% 0.25% 1mL 3mL 6mL 12mL 2y 3y 4y 5y 7y 10y 1 month 2 year 4 year 10 year Rate LIBOR Swap swap swap 12/31/19 1.76% 1.70% 1.70% 1.90% 3/6/20 0.86 0.64
Slide 92: Notes
Notes Slide 6: (1) Funded and unfunded loan commitments (2) 2018 IMF and US Bureau of Economic Analysis Slide 7: (1) Rick Remiker announced his retirement effective May 2020; will be succeeded by Scott Kleinman Slide 9: (1) Total does not include two 2020 Strategy Plan review sessions with the full
Slide 93: Notes
Notes Slide 42: (1) All amounts represent accruing purchased impaired loans; under the applicable accounting guidance (ASC 310‐30), the loans were recorded at fair value upon acquisition and remain in accruing status (2) Annualized Slide 43: (1) Companies with > 25% of their revenue from the auto in
Slide 94: Notes
Notes Slide 57: (1) End of period (2) Tax‐equivalent yield on municipal securities calculated as of December 31, 2019 using 21% corporate tax rate (3) Weighted average yields were calculated using carry value Slide 59: (1) Linked‐quarter percent change annualized (2) Money market deposits, savings /
Slide 95: Notes
Notes Slide 75: (1) End of period; delinquent but accruing as a % of related outstandings at end of period Slide 76: (1) Amounts include Huntington Technology Finance administrative lease delinquencies (2) Amounts include Huntington Technology Finance administrative lease delinquencies and accruing
Slide 96: Investor Relations Contacts
Mark A. Muth Director of Investor Relations Office: 614.480.4720 E‐mail: mark.muth@huntington.com Brian M. Vereb Asst. Dir. of Investor Relations Office: 614.480.5098 E‐mail: brian.m.vereb@huntington.com For additional information, please visit: http://www.huntington.com The Huntington National Bank
Huntington Bancshares — Q1 2020 Earnings Presentation on 6ix